Stocks down, gold up after North Korea threat

Saturday, 12 Aug, 2017

Technology companies were leading a broad slide in USA stocks in early trading Thursday, Aug. 10, 2017, as investors pored over the latest batch of corporate earnings reports.

With stocks and equities falling across Asia and volatility on the rise, funds pared back riskier positions in carry trades which typically favour the higher-yielding Antipodeans.

This may explain why financial markets have adopted a safety first approach to events over the last twelve hours, as government bonds push higher and the Swiss franc, gold and the yen catch a bid. Utilities eked out a small gain.

The US-North Korea spat that allowed safe havens to rally this week continued during today's European session.

Against the Canadian dollar, the aussie dropped to 1.0007 from an early 2-day high of 1.0043. The Dow is up 48.61 points or 0.2 percent at 21,892.62, the Nasdaq is up 35.83 points or 0.6 percent at 6,252.71 and the S&P 500 is up 7.77 points or 0.3 percent at 2,445.98. All the indexes are down for the week.

The benchmark 10-year yield jumped to trade at 2.28 percent after the jobs openings and labor turnover survey showed a record number of job openings for June .

Geopolitical concerns between the United States and North Korea are escalating, and don't Asian markets know it.

North Korea said it was considering plans to fire missiles at Guam, a USA -held Pacific island, after President Trump's warning on Tuesday. President Trump has warned that an attack by North Korea would mean "things will happen to them like they never thought possible". That's the biggest increase since May.

He said: "Equity markets, including Korea, have tended to react less and less to this posturing - the Korea Composite Stock Price index was only down 1% on Tuesday". "This really is a profit-taking sell-off".

"You can see the American effort is diplomatically led, it has diplomatic traction, it is gaining diplomatic results, and I want to stay right there". S&P Capital IQ originally forecast earnings to grow by 6.2 percent. Advanced Micro Devices gave up 50 cents, or 3.9 per cent, to $12.33. Disappointing company earnings also helped pull the market lower, with consumer-focused companies and technology stocks among the biggest decliners. The stock lost $5.07 to $101.91.

Stocks down, gold up after North Korea threat
Stocks down, gold up after North Korea threat

Kohl's, another department store chain, slumped 8.9 percent after reporting that second-quarter sales dipped 0.9 percent compared with the year-ago period. The trend appeared to overshadow strong quarterly revenue growth in the quarter.

The dollar widened losses against the yen to hit a two-month low.

South Korea's won dropped 0.9 percent against the USA dollar to its lowest close since July 13. Brent crude, used to price global oils, gained 10 cents to $52.24 in London.

Other energy futures trading was mixed. It is heading for a 2.5 per cent drop for the week. It is now on track for its biggest weekly drop since the week before the November 8 US presidential election. Silver gained 20 cents, or 1.2 percent, to $17.07 an ounce. Copper rose 4 cents to $2.94 a pound.

Sterling slipped below $1.30, close to a two-and-a-half-week low but it strengthened against the euro by 0.2%, following Tuesday's 10-month low.

The euro held steady at $1.1776.

Considerable weakness is also visible among tobacco stocks, as reflected by the 1.1 percent drop by the NYSE Arca Tobacco Index.

Globally, France's CAC 40 share index fell 1.5 percent by the afternoon; Germany's DAX fell 1.3 percent. Britain's FTSE 100 sank 1.4 percent.

Turkelson says even though South Koreans are concerned about the tension and threats of violence, they're going about their daily lives, business as usual.